Asset Allocation and ESG Under the Spotlight at SS&C Intralinks Alternative Investments EMEA Mini-Summit
Emerging markets remain of interest to asset allocators, and ESG experts call for standardized metrics.
15 September 2021
SS&C Intralinks and MarketsGroup recently hosted two EMEA-focused webinars as part of the Alternative Investments Regional Summit Series 2021. In the two highly engaging sessions, regional experts gave an allocator’s perspective on the future of alternative investments in 2022 and beyond and took a deep dive into environmental, social and corporate governance (ESG) reporting and its evolution.
In the first session titled “The Future of Alternatives in EMEA: Allocators' Perspective” moderated by Intralinks’ Ade Olagbaiye, a panel of three allocators with varied backgrounds and approaches — William Dinning, chief investment officer at Waverton Investment Management; Joshua Matthews, co-founder and managing partner at Maseco Private Wealth; and Tony Zeiger, founder and chief investment officer at PeakView Private Investment Office — explored how institutional allocators can make the most of some developing opportunities such as emerging markets and the digital revolution.
The current state of fundraising
The session began with a review of the current fundraising environment and the speakers expressing surprise at the pace of both capital deployment and new fundraising, given the coffers of dry powder many private equity funds were sitting on pre-pandemic. The speakers acknowledged the competition from SPACs, even if one takes the slowdown of activity in this asset class into account.
During a discussion about strategies that were having traction, the panelists referred to emerging markets, citing China and the commodities space as areas of interest and great potential, but showed less enthusiasm for cryptocurrencies.
The conversation turned to specific criteria relating to asset allocation during which topics such as manager selection, track record, sector experience, execution strategy and the challenges regarding meeting prospective partners virtually due to the ongoing COVID-19 pandemic were mentioned. Fundamentally, the speakers agreed that the process is very much a personal and fund-specific one.
During the audience Q&A, a question was raised about the importance of ESG to the asset allocation process which linked the summit’s first session to the second.
Moderated by Intralinks’ Daphne de Vogue, “ESG Reporting: Tracking Investments Up and Down the Supply Chain” featured a panel comprised of Stephanie Hubold, head of ESG at Altor Equity Partners; Dawn Powell, vice president, responsible investments at Stepstone; and Cornelia Frentz, manager corporate governance at European Circular Bioeconomy Fund. They discussed the need to meet higher standards of ESG reporting and benchmarking to satisfy client demands.
Facing ESG challenges and opportunities
The speakers acknowledged that with ESG investments becoming such an important asset class for institutional and private-client investors alike, the need for industry transparency and consistency has never been higher.
The session kicked off with an exploration of why investors have come to demand more ESG metrics, leading to the speakers giving practical examples of how they track ESG performance in their work and respective portfolios.
A large part of the session was dedicated to a discussion about the need for a standardized approach toward tracking ESG metrics with all speakers agreeing that a standard set of rules and regulations, ideally introduced by limited partners (LPs) and general partners (GPs) themselves, would be hugely beneficial.
Frequent reference was made to the ESG regulations that are coming out of the European Union which are aimed at creating an auditing system similar to the financial auditing system. Illustrating the different approaches to ESG auditing, the speakers spoke about the use of a binary metric for ESG concerns. Naturally, comparing the ESG credentials of two companies that use two different approaches is nearly impossible!
I summed up the two sessions by expressing his delight at the positive outlook the speakers of the first session had on asset allocation post-COVID-19 pandemic. He recognized the interest shown in investment in emerging markets but felt careful due diligence was essential to success. Taking the lead from the personal concerns expressed by the panelists in the ESG session, I noted that ESG affects us all and therefore everybody should have a role to play in its evolution. LPs along with GPs should work alongside regulators to develop a universal and standardized ESG auditing system.
Both EMEA-focused webinars offer viewers valuable insights into the current thinking of asset allocators and ESG experts in the region and make interesting viewing for anyone involved in the private markets.